Deloitte_SaaS Enabled HR Transformation March 2011 Final

Reviewing How SaaS Can Add Value to Your HR Transformation?

Presenters:

John Malikowski, Principal, Deloitte Consulting LLPJannine Zucker, Senior Manger, Deloitte Consulting LLP

March 15, 2011

Copyright © 2010 Deloitte Development LLC. All rights reserved.2

Setting the stage – Cloud and SaaS

Trends in HR Transformation (HRT)

Value drivers in SaaS-enabled HRT

Business case and roadmap considerations

Next-generation SaaS-enabled HRT

Agenda


Cloud –Evolution or Revolution?

• Cloud computing technologies are a natural step for distributed systems –the convergence of virtualization, automation and large-scale IT Service Management. But it’s not revolutionary –it’s evolutionary

• The real revolution is happening in the business, where expectations for agility and flexibility in business operations are in demand. Cloud services create the possibility of rapid business model innovation, improved service levels and new ways of controlling costs

• But there’s even more at stake than being able to do current things faster, better and cheaper. Cloud services can also enable organizations to do entirely new things. Helping companies transform into powerful federations that can compete on a global scale. Enabling supplier and customer networks with unprecedented knowledge sharing. Turning traditional models of transaction processing into value-added services

Some think cloud computing is the next big disruptive technology. Others argue it’s simply the natural evolution of distributed computing capabilities

Though the technology itself is evolutionary, its business implications are nothing short of revolutionary


To cloud or not to cloud?

Does the business problem or technology solution require all of the following?

1. End-user self service – automating customer subscription and provisioning

2. Location independence and multi-tenancy for service provisioning and delivery

3. IP ubiquity – enabling access anytime and anyplace there is a network connection

4. Elastic performance and load – the ability to scale both up and down by period

5. Elastic pricing and contract terms – the ability to subscribe services “by the drink”

What set (or sets) of the 3 dimensions of Cloud are required for the solution?

Business Model

Cloud Service Subscriber

Cloud Service Broker

Cloud Service Provider

Cloud Service Enabler

Service Type

Business-as-a-Service

Software-as-a-Service

Platform-as-a-Service

Infrastructure-as-a-Service

Cloud Computing is one choice in how businesses purchase, deploy, and support IT services. It’s a complex topic. How do you get an actionable discussion?

Service Source

Public cloud

Virtual Private Cloud

Private cloud Hyb

rid

Clo

ud

Co

mm

un

ity

Clo

ud


Typical Characteristics of a SaaS Solution

What is Software-as-a-Service (SaaS)?

• Modern, web-based architecture

• Application and data resides in the “cloud”

• Applications are managed by 3rd party service provider

• Billing based on per-user basis

• Reduced internal IT support

• Updates are distributed on a rapid release schedule

Service Type

Business-as-a-Service

Software-as-a-Service

Platform-as-a-Service

Infrastructure-as-a-Service


Evolution of HR and business needs and technology maturity are converging to create a unique moment in the history of HR Transformation

Convergence of key trends

Busines

s Leaders Recognize

Need for Improve

d HR Delivery Models to

Enable

Busines

s Decision

s and Growth

SaaS

solution’

s Functional

Depth

and Integration

Capabilities are Maturin

g

Increased

opportunity to implement a

different technology enabled HR

Transformation

• During the downturn HR often came up short

• Imperative for HR to drive the investments to enable business growth

• Functionality has significantly advanced in the last 24 months

• New technology adoption continues to grow at rapid pace


HR transformation business impactHR transformation was a movement focused on shifting HR from a largely administrative organization to a more strategic organization. That new work quickly evolved into a broad initiative to transform all HR services.

Revenue Growth

Operational Excellence

Talent Strategies

• Workforce Planning• Succession

Management• Workforce

Development • Job & Work

Redesign• Global Sourcing &

Mobility

• Standardized Operations & Technology

• Workforce Intelligence

• HR Policy • Global Compliance• Culture &

Communications

• Merger, Acquisitions & Divestitures

• Business Transformation

• Organizational Restructuring

• Globalization• New Markets• Innovation

HR transformation provides opportunities for operational excellence, but is also enabling HR to focus and deliver value to important business areas:


A survey of 150+ of our biggest clients revealed the following:

What is the market telling us?

HRT Market is Strong

• 84% are either transforming or planning to transform HR

Business Events Trigger HRT

• 25% cited a new Head of HR or a CEO as a key trigger

CHROs are the Buyers

• 71% of HRT initiatives are sponsored by the CHRO

Efficiency and Effectiveness Drive the Case for HRT

• 85% cited cost savings as a key driver

• 75% cited building more effective services as a key

HR Leaders are Addressing Business Issues

• 40% cited training next generation of leaders

• 33% cited building and managing a global workforce

• 31% cited supporting mergers and acquisitions

Deloitte Human

Resource Transformation

Study2009


SaaS market penetration in the HR space

• SaaS is one of the fastest-growing deployment models. SaaS subscriptions' revenue currently accounts for significant percentage of total software revenue in HR/human capital management (HCM) applications.

• Subscription revenues in the HR/HCM market were ~$1.5 billion of the approximately $6 billion overall market (software revenues, consisting of licenses, maintenance, and subscriptions). The subscriptions category is growing two to three times versus low single digit growth for on-premise maintenance and licenses.

• SaaS is the leading model for Talent Management technology solutions. Software as a Service (SaaS) vendors are supporting some of the largest, most complex organizations and their talent strategies. In 2009, The SaaS talent management market was estimated to be over $2.0 billion and was one of the fastest growing areas over the previous year.


• Increasing number of customers are leveraging SaaS as a key HR Transformation enabler

• Competitiveness of point solutions has put pressure on traditional solutions to overhaul their Talent modules

• A number of these products are focusing on getting Talent capabilities into the hands of customers as simply and quickly as possible

• Entrance of SaaS unified HCM to the market now enables organizations to get the depth of functionality – reducing need for point-solutions

• We anticipate we will see a shift in the numbers of companies selecting integrated solutions over point technologies as they continue to see the value of true integration

Trends in HR SaaS technology


Value: How companies get more out of HR transformations enabled by SaaS

• Shorter delivery time

• Quicker value to COEs, HR Business Partners, Employees, Manager, HR organization

• Faster deployment of improved, flexible, and more intuitive tools to the end users

• Reduced Implementation costs

• Lower on-going costs (TCO)

• Cash flow (subscribe vs. buy)

• Faster realization of transformation benefits

• Faster timeframe to address talent areas

• Frequent talent feature / functionality updates

• Faster deployment of talent management solutions(e.g. performance, compensation, succession)


HR SaaS business case considerations

Traditionalon-premise model

SaaS BasedHR SolutionAreas to Address

Software RelatedInitial purchase plus annual maintenance

(capital purchase)

Subscription based (operating expense – typically

multi-tenant model)

Hardware RelatedInitial purchase plus annual maintenance

(capital purchase)

Included in subscription

Upgrade / Update(features & functionality)

Patches and ultimate upgrade

Frequent updates for all clients

Enhancement /Modifications

Customizations typically allowed on

client’s instance

Configuration usage only (all clients running same

version)

Speed to DeliverLonger to implement

compared to SaaS

Faster to implementdue to less areas that

can be changed by client


Prepare for Cloud Computing by looking at economics, technical feasibility, and risk – for internal, external, and hybrid cloud computing models

Benefits and areas to consider when migrating to a HR SaaS solution

IT Services Portfolio

Risk & ControlTechnical Feasibility

Economic Return

Economic Fit

Transition Cost

Benefit Analysis

Architecture Readiness

Vendor Capability

Migration Complexity

Data Control Governance

Vendor Compliance

Security & Privacy

Integration Complexity

On-GoingOperations

Greatest Value in Shortest Time

SaaS / Cloud Strategy

Replace

ExtendConsolidate

10987654321

SaaS is changing the traditional IT procurement models for the enterprise by offering alternatives to existing vendor channels.

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• SaaS has significant potential to transform IT and enterprises from traditional structures to more nimble, flexible, and affordable architectures

• Enterprises should recognize these emerging capabilities and prepare to take advantage of new service offerings, aligned with their operational environments and risk profiles

• Enterprises need to navigate the options, assess the opportunities and risks, and migrate to a SaaS environment that meets their needs, while positioning for future adoption of additional capabilities

SaaS is a significant advance, presenting major opportunities now and in the future SaaS / Cloud computing is creating a shift in the economics of IT, and will have a major impact in HR Transformations and HR service delivery

The real power of HR SaaS and cloud computing is in the potential to re-think and re-design HR delivery and IT

architectures at a fundamental level.


John Malikowski

Principal, Deloitte Consulting LLP

[email protected]

Jannine Zucker

Senior Manager, Deloitte Consulting LLP

[email protected]

Contact info

mailto:[email protected]

mailto:[email protected]


This presentation contains general information only and is based on the experiences and research of Deloitte practitioners. Deloitte is not, by means of this presentation, rendering business, financial, investment, or other professional advice or services. This presentation is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte, its affiliates, and related entities shall not be responsible for any loss sustained by any person who relies on this presentation.


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Deloitte_SaaS Enabled HR Transformation March 2011 Final

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